Corporate Taxes are passed onto consumers, as much 35% of the price of new car is based on Corporate income taxes. You will pay a 9% sales tax on a car that will have it’s price reduced as much as 26%. Therefore, you will realize an overall savings.
That said, Herman Cain is fun to watch him hammer these liberal punks who put people in a box. Cain needs to keep telling it like it is to the blacks AND the whites who want to keep everyone down. I am sure the blacks who have been preferred by the establishment for their roles hate Herman Cain with a passion, but you will see one or two black entertainers or athletes step out and confirm his words.
Do they have “sentence check”?
That is the concept that the vast majority people fail to understand. Even somebody on welfare does not escape income taxes that are embeded into the price of every good and service that they consume. And policiticians love it that people don't understand. If politicians were transparent in their disclosure of the REAL burden of taxes that people pay, every government employee in Washington would be afraid to show up to work tomorrow
>>Corporate Taxes are passed onto consumers, as much 35% of the price of new car is based on Corporate income taxes. You will pay a 9% sales tax on a car that will have it’s price reduced as much as 26%. Therefore, you will realize an overall savings.<<
Sorry, but that’s incorrect. Cain’s program (which I think deserves some consideration, by the way) doesn’t cut the corporate income tax to 9%; it replaces the corporate income tax with a tax on gross sales, less some adjustments. And because the 35% income tax is only paid on profits, it’s actually possible that Cain’s 9% corporate tax is a higher tax than what the company is paying now. This is certainly true, for example, when the company breaks even for the year and owes no income tax. Under Cain’s formula, they would, because they would have sales revenues, and the adjustments permitted wouldn’t reduce that figure to zero, so the company would owe 9% of something as opposed to 35% of nothing.
The real key to Cain’s plan is how it structure incentives. A 9% personal income tax is a tremendous incentive to work because you get to keep what you make. A 9% sales tax is a disincentive to purchasing, which raises savings and provides a source of long-term capital. And a 9% tax on corporate sales (it sounds like it’s sort of net corporate revenues, because the company gets to deduct the cost of products bought from other companies) is almost like another sales tax. Because of the way it’s structured, a company that’s labor intensive, say a law office, would pay almost 9% on total revenues for the year, whereas a company that’s capital equipment/resource intensive, say a steel company that’s highly automated, would pay 9% on only a small portion of their total revenues, because they could deduct the cost of all the iron ore, equipment, electricity, etc., that they purchased to make the steel.
The beauty of it, though, is that it would be a constant number, and companies would be able to easily adjust the prices of their products to account for the taxes they would owe. Also, taxes would effectively be lower on manufacturing companies (with high resource inputs) enabling domestic companies to better compete with overseas manufacturers. Domestic industries like law firms and accountants would pay high taxes relatively speaking, but don’t typically compete with overseas suppliers of their services.
It’s a very complex plan when you try to consider the details, but I think the incentives are generally good. Anyone that says they know how it’s all going to sort out in the end, though, is just blowing smoke. A certain amount of trust has to be put in establishing the right incentives, and then letting the economy do its thing. After all, that’s what Reagan did...he just dropped personal tax rates and stood back and watched people start working and paying taxes at a faster clip...and it worked.
John, I think you need to re-visit the numbers. Isn't the federal tax on corporations applied only to the profits? I do not believe they pay 35% on all revenues, just on profits. So the 35% would not apply to the cost of the car, but the 9% would.
Unfortunately you have to actually have faith that a business would actually reduce it’s price if it’s tax rate fell. I find it really hard to believe myself. I can see the business pocketing the difference and giving it’s CEO a huge bonus.
It’s an interesting idea and the only ‘new’ idea out there, I would still vote for someone like Cain even if this is what he thinks is the answer, because he supposedly cannot enact this type of tax by himself.